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The fundamental issue the Ontario Court of Appeal (OCA) was grappling with in a class-action lawsuit against major banks was the meaning of “exercising due diligence” to discover a potential claim, Toronto class-action lawyer Margaret Waddell tells Law Times.
“The error of the motions judge was in holding class counsel to an unreasonably high standard — effectively expecting them to function like a regulatory investigator, and expecting them to take extraordinary steps,” says Waddell, a partner with Waddell Phillips Professional Corporation.
The case, which involves more than a dozen financial institutions, alleges that banks “took active steps to conceal their participation” in a scheme to fix prices in the foreign exchange market between Jan. 1, 2003 and Dec. 31, 2013, says the article.
The OCA decision, which overturned a lower court’s ruling, will mean that entities related to two financial institutions will be added to the lawsuit against major banks, says the article.
Series of legal actions
It’s the latest development in a series of legal actions in several countries involving secretive chat messages that allegedly took place between bankers in foreign exchange markets, says the article.
“The appeal decision explored what steps a representative plaintiff could reasonably take to establish that the Canadian banks could be co-conspirators in the secretive price-fixing scheme in the foreign exchange markets,” says Law Times.
In the Superior Court of Justice decision, the judge said there was no evidence linking the other financial institutions to the alleged conspiracy, and he reasoned that the plaintiff could have conducted a meaningful investigation to identify the banks as co-conspirators, the article says.
But the OCA found that the motion judge had “too high an evidentiary threshold.”
A group of financial entities had already settled when the appellant tried to add more institutions to the list of defendants in 2016, says the Law Times.
‘Collusive chats’
The plaintiff’s grounds were that traders at two financial institutions were among participants in a conversation with more than 2,000 “collusive chats,” according to the appeal.
The OCA decision notes that, “In most Ontario cases, including this one, an action must be started on or before the second anniversary of the day on which the claim was discovered.”
The claim in this matter would have been statute-barred if they discovered it before July 20, 2014, says the article.
But the OCA found that the plaintiff’s explanations should be given a “generous reading,” and that context must be considered when assessing whether a plaintiff did “reasonable diligence” to find evidence, says the article.
